The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

	Total	Dirt Bikes	Mountain Bikes	Racing Bikes
Sales	$ 923,000	$ 263,000	$ 406,000	$ 254,000
Variable manufacturing and selling expenses	459,000	115,000	192,000	152,000
Contribution margin	464,000	148,000	214,000	102,000
Fixed expenses:
Advertising, traceable	70,100	8,900	40,900	20,300
Depreciation of special equipment	43,300	20,500	7,600	15,200
Salaries of product-line managers	115,300	40,200	38,400	36,700
Allocated common fixed expenses*	184,600	52,600	81,200	50,800
Total fixed expenses	413,300	122,200	168,100	123,000
Net operating income (loss)	$ 50,700	$ 25,800	$ 45,900	$ (21,000)

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Required:

1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

2. Should the production and sale of racing bikes be discontinued?

3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required 1 Required 2 > Financial advantage per quarter Financial (disadvantage) per quarter Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes No Required 1 Required 2 Required 3 Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-ri profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) 0 0 0 0 Traceable fixed expenses: Total traceable fixed expenses 0 0 0 Product line segment margin (loss) 0 $ 0 $ 0 $ 0 Net operating income (loss) $ 0